RBI cautions users of virtual currency, again

New Delhi, Feb. 6 -- The Reserve Bank of India (RBI) on 1 February said that it has not given any licence or authorization to any entity or company to operate virtual currency schemes or deal with bitcoin or any virtual currency. "Any user, holder, investor or trader dealing with virtual currencies is doing it at their own risk," said RBI in a release on its website.
This is not the first time that the central bank has issued a cautionary note in this regard. In December 2013, it had cautioned users, holders and traders of virtual currencies, including bitcoins, about the potential financial, operational, legal, customer protection and security risks they are exposing themselves to.
What is a virtual currency
A virtual currency is created through encryption techniques. There are various kinds, such as: bitcoin, litecoin, peercoin, namecoin, ether and primecoin. Among these, bitcoin is most famous. In India, there are multiple bitcoin exchanges, bitcoin mining companies and portfolio management firms. You have the option to buy bitcoins from a website or through an app. To buy, you have to sign up with one of the websites such as Coinsecure, Unocoin, BTCXIndia or Zebpay. Next, you have to provide information such as your Permanent Account Number and your bank details to buy bitcoins. You have to use Net banking and pay using National Electronic Funds Transfer (NEFT), Real-time Gross Settlement (RTGS) or Immediate Payment Service (IMPS).
Some bitcoin exchanges allow you to buy e-commerce vouchers, movie tickets and even make bill payments using this currency.
What you should do
After a gap of 3 years, the RBI has again cautioned consumers about bitcoin use. However, in January this year, Institute for Development and Research in Banking Technology (IDRBT), an arm of RBI, came out with a white paper on application of blockchain technology to the banking and financial sector in India. Blockchain is the underlying technology in Bitcoin. In the white paper, IDBRT's working group proposes a road map for adoption of blockchain technology in Indian banking.
Remember that bitcoins or any other virtual currency is not regulated in India. Besides regulatory concerns, there have been cases of fraud as well in other countries.
Moreover, bitcoin prices have been volatile. In September 2016, one bitcoin was worth Rs40,000. On 2 February, it was Rs70,000.
Mint Money does not recommend buying bitcoins for investment or otherwise. But if you want to venture in this space, tread with caution